ACH Payment Return Codes and Descriptions Qualpay Merchant Knowledge Base

ACH Returns do not happen immediately upon payment, as you might expect for credit card declines. Instead, ACH payments on business bank accounts may be returned within 1-2 days of the payment. ACH payments on consumer bank accounts may be returned within 1-60 days of the payment. ACH return codes are special numbers that reach back to net sales requesters whenever ACH money can’t be taken from a customer’s account. These codes function just like credit card decline codes, as they give more information about why the trouble occurred. Refunds for ACH transactions can be initiated by either the originating financial institution or by the receiver, depending on the transaction type.

Time Frame for Returns

However, our list of codes will help you resolve any return codes you may encounter. Check out PaymentCloud’s resources for more on accepting ACH payments. As a merchant, you should use instant bank verification tools to verify names on accounts as well as balances to Remote Bookkeeping ensure the funds are available. These tools can help you avoid many issues leading to reversals and returns.

Accept ACH payments with Checkout.com

But, while bounced checks are generally caused by insufficient funds, that’s only one of multiple reasons why an ACH return may happen. The RDFI is the financial institution who receives the credit or debit on behalf of the payee (“the Receiver”). Less common among return codes, ACH return code R31 appears when an RDFI seeks to return a CCD or CTX entry. ACH payments refer exclusively to computer-based electronic transfers, not physical transactions. These payments are particularly common amongst business-to-business transactions.

Account validation and a balance check

Another thing that you should know is how “notice of change” (NOC) can also play a role in the ACH debit return process. This can happen when customers change their bank account information. Let’s say the consumer has provided the streaming service with debit authorization but doesn’t have enough funds in their account to cover the transaction. In ach return this case, their bank has up to 2 days after settlement to return the payment to the streaming service with the code R01. Failure to do so within 2 days will make the consumer’s bank liable for the funds.

• When an ACH payment fails, it triggers communication between the receiving depository financial institution (RDFI) and the originating depository financial institution (ODFI).
• If ACH payments are returned, you—as the merchant or provider—don’t receive the money you need for your product or service.
• In an ACH transfer, the Receiving Depository Financial Institution (RDFI) is the name given to the bank or institution receiving the money through the intended payment transfer.
• Similar to ODFIs, prominent banking institutions are typically RDFI-approved, as are numerous third-party payment processors and even payment gateways.
• In the meantime, the ODFI will debit the end customer’s account and credit the Originator’s account, basically creating a hold for the account.
• If the payment amount exceeds the maximum limit imposed by the sending or receiving banks, an ACH return will be issued.

With a stop payment order, the customer reaches out to their bank before a scheduled debit entry is set to hit their account. Regarding electronic payments, most merchants think of credit cards or debit cards. Today, they may even think of digital wallets and other contactless payment methods.